The yeast halotolerance gene HAL2 encodes a nucleotidase that dephosphorylates 3'-phosphoadenosine 5'-phosphate (PAP) and 3'-phosphoadenosine 5'-phosphosulfate (PAPS), intermediates of the sulfate assimilation pathway. This nucleotidase is inhibited by Na+ and Li+ but not by K+. Incubation of wild-type yeast cells with NaCl and LiCl, but not with KCl, increased intracellular PAP to millimolar concentrations. No depletion of the pool of adenine nucleotides (AMP, ADP, ATP) was observed. Other stresses such as heat shock or oxidative stress did not result in PAP accumulation. PAPS concentrations also increased during salt stress but remained lower than 0.5 microM. S-Adenosylmethionine concentrations decreased by 50%, reflecting inhibition of sulfate assimilation during salt stress. Salt-induced PAP accumulation was attenuated in a yeast strain overexpressing HAL2. This strain grew better than the wild type under salt stress. These results suggest that the cation sensitivity of the HAL2 nucleotidase is an important determinant of the inhibition of yeast growth by sodium and lithium salts. In addition to blocking sulfate assimilation by product inhibition of PAPS reductase, PAP accumulation may have other unidentified toxic effects.